Buy a home or rent? It's a tossup, index says

Is it better to buy a home or rent and reinvest the savings? In South Florida, it's hard to go wrong either way, according to a quarterly housing index released Tuesday.

Most analysts agree that an overheated rental market favors buying. But South Florida renters who invest the money they would have spent on taxes, maintenance and other costs can do just as well as homeowners in building long-term wealth, says the Beracha, Hardin & Johnson Buy vs. Rent Index.

"There's really no clear advantage," said Ken Johnson, a Florida Atlantic University professor and one of three creators of the index. The others are Florida International University professors Eli Beracha and William G. Hardin III.

The index analyzes whether consumers would be better off buying a home and building equity or renting a comparable property and investing the savings and down payment in stocks and bonds. The index covers the nation's housing market by spotlighting 23 major metro areas.

Although home prices are rising in Palm Beach, Broward and Miami-Dade counties, values aren't in danger of approaching a housing bubble, the index shows.

Still, Johnson advises buyers to negotiate wisely and not fall into the trap of bidding wars.

"If you miss out on a property, it's probably better off that you did," he said. "This isn't 2012 when you could buy and not make a mistake. You can make a mistake now."

While price increases have moderated across South Florida, values are rising quickly in Dallas, Denver and Houston, making a downturn more likely in those metros, according to the index.

"A continuation of rapid and dramatic price increases ... will almost certainly lead to pricing bubbles and resulting local real estate crashes," Beracha said in a statement.